STATEMENTS BY THE MINISTRY
AND RESPONSES

CONSUMER PROTECTION

Hon. Tracy MacCharles: In the throne speech, our government committed to provide stronger consumer protection for the people of Ontario. I rise with pleasure in the House today to announce that we are following through on that commitment.

We are introducing the Stronger Protection for Ontario Consumers Act. This bill addresses four key areas to make Ontario’s marketplace fairer and to boost consumer confidence. The bill…..provide stronger safeguards to strengthen the integrity of real estate bidding practices, and give home sellers more power to negotiate flexible, lower-cost arrangements when using real estate professional services.

Mr. Speaker, I’d like to provide a few details of these reforms and explain how our plan will strengthen and protect consumer rights for all of the people of Ontario.

When it comes to real estate reforms, Mr. Speaker, Ontario’s real estate professionals are among the very, very best, and this government has confidence in the effective role of the Real Estate Council of Ontario and the role it plays in regulating this sector.

To maintain that public confidence in real estate transactions, when multiple bids on the same property are involved, this bill would require real estate salespersons and brokers acting on behalf of a buyer to only present an offer that is in writing. Salespersons and brokers would also be prohibited from suggesting or claiming that a written offer exists when one does not exist. The legislation would, if passed, also require brokerages acting for the seller to retain copies of all written offers related to the sale or purchase of the property. Any person who’s made a written offer to purchase a particular home may ask the registrar at the Real Estate Council of Ontario to work with the seller’s brokerage to determine the actual number of written offers that were received, and to report that number.

As well, a separate amendment would give homebuyers and sellers more power to negotiate lower-cost services by removing the ban in Ontario on charging both fees and commissions. Allowing real estate agents to charge a combination of a percentage and a fixed amount when pricing their services will better serve consumers, and has the potential to unleash innovation and creativity in the sector. This change will make Ontario’s real estate marketplace consistent with other provinces in our country while responding to a previous recommendation of the Competition Bureau.

These proposed reforms build on steps our government has already taken to strengthen consumer protection for people in Ontario. For example, our review of Ontario’s Condominium Act is well under way, with residents and stakeholders engaged in helping us make the marketplace fairer for all involved. Our engagement process is not only about government listening to owners and stakeholders; it’s also about members of the condominium community listening to each other. It’s about building consensus among different groups who are setting the direction and shaping the proposed changes to the Condominium Act. And it’s working, Speaker.

Earlier this year, our government introduced its plan to look at qualifications for home inspectors to ensure that when people make a final key decision about buying a house, they can do so with full confidence that the information about the state of the house is reliable.

The Ministry of Consumer Services is working hard to help consumers better understand their rights and to help businesses understand their responsibilities. These are the first of a series of strong consumer actions we are taking to make our marketplace safe, fair and one where all people in this province can have the confidence in the purchases and the investments they make.

I am confident that these reforms will give the people of Ontario stronger consumer protection while building consumer confidence in the marketplace. This would ultimately help strengthen the economy of this wonderful province.

The Speaker (Hon. Dave Levac): It’s now time for responses.

Mr. Jim McDonell: I’m happy to rise today on the proposed legislation to deal with a number of issues in consumer protection, legislation that I believe is well overdue.

When we go to real estate, we all know that each house and each seller and each buyer are unique. This applies to brokers and realtors as well. Removing the restrictions regarding fees and commissions will allow brokers to compete more transparently as long as the minister provides for a full disclosure of the total cost of the sale. The sellers and buyers deserve to know exactly what they’ll pay the broker under any agreement.

I’m interested in tackling the phantom offers, since this type of sales tactic occurs both in real estate purchases and the rental market as well. From the briefing, I took that the Real Estate Council of Ontario will be able to pursue brokers who falsely claim the existence of numerous offers on the property. If and when this act comes into force, I hope the minister and RECO will enact the necessary regulations, keeping in mind the need for a detailed paper trail.

Although the briefing was scheduled this morning when I could not be there, we look forward to seeing just what is in this bill and look forward to something for the consumers of Ontario.

Mr. Michael Prue: It’s my privilege and honour to be here today to comment on this bill. This would normally be the responsibility of my colleague the member from Bramalea–Gore–Malton, as he is the critic, but unfortunately, he was not able to be here at this exact moment to participate in the announcement of this bill and asked me to do so. We look forward to this bill.

I’m mindful as well of the other things that are being said here: the debt settlement and the real estate reforms. These reforms, too, are long overdue. I think anyone who has ever been caught in a bidding war for a house will let you know how unnerving that is and how you get a sinking feeling in the pit of your stomach that you’ve been had when it’s over. The multiple bids that you never see, the other people bidding—it’s not like an auction where you can go see other hands go up; this is all done in secret, and it needs to be transparent. People who are spending and making the biggest purchase of their entire lives, people who are spending in reality hundreds of thousands of dollars, sometimes are bidding up more than hundreds of thousands of dollars to get their dream home, need to know that this is all above board.

I know that real estate agents are in favour of this…. I know that Ontarians will be in favour of this. But please, let’s make it as strong as we can and let’s put an education component in here to make sure that people understand that it is not right and that the government of Ontario will protect them when they’re being ripped off.

Note:references to statements concerning other parts of the Bill unrelated to real estate were deleted.

Comment

This position taken as evidenced by Bill 55 is correctly stated by the Government.

The criticism offered by Mr. McDonell is spurious:

This applies to brokers and realtors as well.

The Act describes brokerages, brokers and sales representatives. There is no reference to realtors, a trademarked term of the NAR, used under licence by CREA, and applying to about 75% of practising Ontario registrants.

Removing the restrictions regarding fees and commissions will allow brokers to compete more transparently

There is a good deal of transparency now. This doesn’t change anything in that regard.

as long as the minister provides for a full disclosure of the total cost of the sale.

There is an obligation upon registrants to provide full disclosure now, other provisions of the Act. No changes are required.

The sellers and buyers deserve to know exactly what they’ll pay the broker under any agreement.

Again, there is an obligation upon registrants to provide full disclosure now, other provisions of the Act. No changes are required.

Mr. McDonell went on to comment upon phantom offers:

I’m interested in tackling the phantom offers, since this type of sales tactic occurs both in real estate purchases and the rental market as well.

To suggest that this is a “sales technique” is an insult to the real estate profession. This type of conduct is simply fraud under the Criminal Code of Canada. It’s not a recognized sales technique. It’s a crime perpetrated by a few.

From the briefing, I took that the Real Estate Council of Ontario will be able to pursue brokers who falsely claim the existence of numerous offers on the property.

The Act will only apply to purchases, not rentals.

Mr. Michael Prue’s observation was not much better:

I think anyone who has ever been caught in a bidding war for a house will let you know how unnerving that is and how you get a sinking feeling in the pit of your stomach that you’ve been had when it’s over.

This is not the case with all bidding wars! It’s just some. It’s the small minority. RECO is now charged with the responsibility to keep the bidding system fair and “above board”. Those will are devious will find it difficult to operate and will get caught.

Bidding wars, however, are a fact of life, and there’s nothing wrong with them. They offer free and open competition in the marketplace. If you don’t like it, don’t compete.

It seems obvious that there should have been better briefing sessions prior to introduction in the Legislature, and the call for vote.

Brian Madigan LL.B.,Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through RE/MAX West Realty Inc., Brokerage 416-745-2300.www.iSourceRealEstate.com